"Political language -- and with variations this is true of all political parties, from Conservatives to Anarchists -- is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind."
-- George Orwell, Politics and the English Language

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Saturday, December 16, 2006

Bonus Plan

If I were some hacky financial reporter oohing and aahing over the doings of suited swells (and for all you know, I am), I'd headline this story with some obvious cliché such as "Big Mack Attack".

NEW YORK - Morgan Stanley Inc., the second-largest U.S. investment house, gave chief executive John Mack $40 million in stock and options for 2006, reflecting the largest bonus awarded to a Wall Street CEO.

Mack, 62, was awarded 461,821 stock units valued at $36.2 million on December 12, according to a filing with the Securities and Exchange Commission late Thursday. He was also awarded 178,945 options to buy Morgan Stanley shares, valued at about $4 million.

Morgan Stanley is expected to report its best year ever on Tuesday, buoyed by a record run in the stock market and an unprecedented level of takeover activity. Goldman Sachs Group Inc., Bear Stearns Cos. and Lehman Brothers Holdings Inc. turned in record profit reports this week.

I don't mean to get all Marxist or anything, folks, but perhaps we need to start at least teaching Thorstein Veblen in the schools. There is a very serious and unhealthy reconcentration of wealth, that began in the Reagan years, and continued unabated through Clinton and now Fredo Corleone. It is unhealthy and unconscionable that many people have to work two jobs just to survive, while people who juggle derivatives and produce phantom profits get eight-figure bonuses.

Mack's compensation eclipses the $38.3 million former Goldman Sachs CEO Henry Paulson received in 2005.

Nowhere in the article is it mentioned that Paulson is the current Secretary of the Treasury. That factoid may not be implicit or contingent upon anything in particular, but it would seem to be at least relevant. Apparently not. That would be like pointing out that Halliburton's value and portfolio has skyrocketed -- along with Dick Cheney's pocketbook -- since Cheney slithered into office. Everything is always purely coincidental.

The reason most Americans think the economy is fair to poor is simple: For most Americans, it really is fair to poor. Wages have failed to keep up with rising prices. Even in 2005, a year in which the economy grew quite fast, the income of most non-elderly families lagged behind inflation. The number of Americans in poverty has risen even in the face of an official economic recovery, as has the number of Americans without health insurance. Most Americans are little, if any, better off than they were last year and definitely worse off than they were in 2000.

But how is this possible? The economic pie is getting bigger -- how can it be true that most Americans are getting smaller slices? The answer, of course, is that a few people are getting much, much bigger slices. Although wages have stagnated since Bush took office, corporate profits have doubled. The gap between the nation's CEOs and average workers is now ten times greater than it was a generation ago. And while Bush's tax cuts shaved only a few hundred dollars off the tax bills of most Americans, they saved the richest one percent more than $44,000 on average. In fact, once all of Bush's tax cuts take effect, it is estimated that those with incomes of more than $200,000 a year -- the richest five percent of the population -- will pocket almost half of the money. Those who make less than $75,000 a year -- eighty percent of America -- will receive barely a quarter of the cuts. In the Bush era, economic inequality is on the rise.

Rising inequality isn't new. The gap between rich and poor started growing before Ronald Reagan took office, and it continued to widen through the Clinton years. But what is happening under Bush is something entirely unprecedented: For the first time in our history, so much growth is being siphoned off to a small, wealthy minority that most Americans are failing to gain ground even during a time of economic growth -- and they know it.

The middle class is being squeezed dry. Insurance and pharmaceutical companies have rendered the health care system an expensive, useless joke, making affordable care available only to the wealthy and the destitute. HMO providers are frequently little more than pushers for the latest $150/month drug, that may or may not even work, not to mention the potential side effects. There is plenty of lip service paid to the benefits of preventive medicine, but everything in the American health care system is channeled toward treatment, and the revenue model amply reflects that. And it is going to reach a real crisis point as the baby boomers start retiring.

So you have real wages stagnant, but costs for everything from fuel to food to housing to health care rise inexorably. CEOs write their own performance tickets that translate on the average to over 300 times what their average worker makes. Our elected leaders try much harder to help out Paris Hilton with yet another tax cut for doing nothing, than to help Joe Six-Pack keep his house, or help him avoid bankruptcy and utter destitution.

I don't understand why people so reflexively shy away from the term "class warfare". I think we need a Sun Tzu of class warfare at this point. This is not about "fair" or "unfair", this is about the health and continued sustainability of a society, the notion that a bunch of Wall Street bookies fucking around with percentage points all day live in a completely different world than people who work like dogs until the day they drop. We need to have a public conversation about the reward system in this country, and divorce it from the lottery mentality that the diddlers of lucky percentage points have foisted on the financially illiterate.